Correlation Between AVITA Medical and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and INSURANCE AUST at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AVITA Medical and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and INSURANCE AUST GRP, you can compare the effects of market volatilities on AVITA Medical and INSURANCE AUST and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AVITA Medical with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and INSURANCE AUST.
Diversification Opportunities for AVITA Medical and INSURANCE AUST
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AVITA and INSURANCE is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP and AVITA Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AVITA Medical are associated (or correlated) with INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of AVITA Medical i.e., AVITA Medical and INSURANCE AUST go up and down completely randomly.
Pair Corralation between AVITA Medical and INSURANCE AUST
Assuming the 90 days trading horizon AVITA Medical is expected to generate 2.83 times more return on investment than INSURANCE AUST. However, AVITA Medical is 2.83 times more volatile than INSURANCE AUST GRP. It trades about 0.05 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.09 per unit of risk. If you would invest 123.00 in AVITA Medical on September 20, 2024 and sell it today you would earn a total of 107.00 from holding AVITA Medical or generate 86.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
AVITA Medical vs. INSURANCE AUST GRP
Performance |
| Timeline |
| AVITA Medical |
| INSURANCE AUST GRP |
AVITA Medical and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and INSURANCE AUST
The main advantage of trading using opposite AVITA Medical and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, INSURANCE AUST can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| AVITA Medical vs. MHP Hotel AG | AVITA Medical vs. Hyatt Hotels | AVITA Medical vs. DISTRICT METALS | AVITA Medical vs. Jacquet Metal Service |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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